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42 Cards in this Set
- Front
- Back
To document accredited investors, a _______________________ must be completed and signed by the potential purchaser
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accredited investor questionnaire
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Investment companies, such as ___________ are non-exempt; therefore their securities must be registered and sold under a prospectus
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mutual funds
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US Gov issues, savings and loan issues, and municipal issues are ___________________
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exempt
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Regulation A gives an issuer an exemption from registration for issues of _________ or less to be sold within a 12 month period
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5MM
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Rule 144 allows the sale of the greater of 1% of the outstanding shares or the weekly average of the preceding 4 weeks trading volume every 90 days
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Be sure to pay attention to "the preceding week"
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Regulation D permits a private placement to be sold to a maximum of ________________ NON-accredited investors and an _______________ number of accredited (wealthy and institutional)
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35 and unlimited
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Stabilizing bids are permitted at any time after registration become effective. it is placed ____________ or below the POP, NEVER ABOVE.
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At or below
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Stablizing bids must cease when the syndicate is broken by the manager. a "notice of stablization" myst be included in the ________________
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prospectus
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The determination of which stocks are marginable is made by the ______________
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FRB
the FRB decides which non-exempt securities are marginable. it has decided that all listed securities are marginable and OTC securities which it approves are marginable |
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a 13D notice would be filed when an investor accumulates a ______________ or greater position in the common stock of an issuer
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5%
are required to file within 10 business days |
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Under rule 10b-5-1, pre-arranged trading plans by insiders are:
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- permitted only if the provisions cannot be altered during the plan's life
- give a safe harbor to officers and directors against an "insider trading" prosecution if the plan is followed |
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the FTC act of 1991 requires that UNsolicited calls cannot be made before 8am and after 9pm.
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UNsolicited
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If an analyst fails to make the required certification, FINRA must be notified; and for the next 120 days, any research reports authored by that analyst must include the disclosure that the analyst did not provide the required certification.
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Regulation AC
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FINRA requires that when a private placement is offered, the broker-dealer or its representatives must conduct a reasonable investigation concerning that security and the issuer's representations about it.
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issuer and its management;
business prospects of the issuer; assets held by the issuer; claims being made; and intended use of the proceeds of the offering. |
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The Chairman of a bank municipal broker-dealer is on the town council involved in a negotiated municipal bond underwriting being performed by that municipal broker-dealer. Under MSRB rules, which statement is TRUE regarding disclosure of the relationship?
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The relationship must be disclosed to customers in writing no later than at confirmation of sale
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Options Sales Literature is any written communication distributed to customers or the public that contains any analysis, performance report, projection or recommendation. Included, as well, are standard forms of options worksheets (these detail gain, loss, and breakeven for a given strategy to be employed by a customer), and seminar texts for lectures to be given to the public about options. Sales literature must be accompanied or preceded by an Options Disclosure Document.
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Sales literature must be accompanied or preceded by an Options Disclosure Document.
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Only the proceeds from the primary distribution will go to the company. The proceeds from the secondary distribution go to the selling shareholders.
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This is a combined primary and secondary distribution. The primary distribution of 300,000 shares consists of the newly issued shares where the proceeds will go to the issuer. The secondary distribution consists of the 200,000 shares being sold by officers
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Credit can be extended on new issues:
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after 30 days have elapsed from the completion of the offering
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An "accredited investor questionnaire" is required when which type of offering is made to investors?
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Regulation D - private placements
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An unaffiliated investor is permitted to sell "144" shares without being subject to the volume limitations:
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after holding the securities for 6 months
as long as the seller has been unaffiliated with the issuer for at least 3 months. |
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Syndicate members that are not market makers are permitted to buy Tier 1 securities anytime prior to the effective date
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Syndicate members that are not market makers are restricted from buying Tier 3 securities for the 5 business day window of time prior to the effective date
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The Federal Reserve Board (FRB) only has the power to set margins for non-exempt issues. It has no power to set margins for exempt issues under the Securities Exchange Act of 1934. However, FINRA sets minimum margins for both exempt and non-exempt issues.
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FRB - Non exempt only for marginable
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Anti fraud - 1933 (issuers)
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Anti Fraud - 1934 (people)
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SEC Rule 10b-18
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Must be effected through 1 broker/dealer on any given day;
Cannot be the opening transaction; Cannot be executed within 10 minutes of market close if the security is "actively traded," otherwise it cannot be executed within 30 minutes of market close; Must be effected at prices no higher than the current market; Cannot exceed 25% of the trading volume in the security that day (except for block purchases handled outside the normal flow of orders). |
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Who maintains Do Not Call Lists?
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Member firm and FTC
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The FINRA 5% rule does not apply to transactions that require a prospectus
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TRUE
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Recommending the use of put options or repurchase agreements to protect against loss are both valid strategies and are permitted under MSRB rules
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MSRB rules
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The MSRB has no authority over municipal issuers. It regulates municipal brokers and dealers, including bank dealers in the municipal market.
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The MSRB has no authority over municipal issuers
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EMMA stands for Electronic Municipal Market Access. The EMMA web portal, run by the MSRB, makes available to the investing public:
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Official Statements, Preliminary Official Statements, Advance Refunding Documents, and Event Notices;
Real time reporting of municipal bond trades through RTRS (Real Time Reporting System); Real time reporting of municipal note trades through SHORT (Short-Term Obligation Rate Transparency System). |
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what must be disclosed in a COMPETITIVE bid?
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- offering price
- order priority provisions (PGDM) |
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what must be disclosed in a NEGOTIATED bid?
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- offering price of each maturity
- spread |
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Issuers of securities are prohibited from:
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selling calls on their own stock
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The President of PDQ Corporation donates restricted PDQ shares to the United Way after holding them for 3 years fully paid. United Way can sell the stock without restriction:
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immediately
as long as the 6 month holding period has been met on the restricted shares (officer held for 3 years) when they are donated, the charity can sell them immediately. there is no requirement that another 6 month hp be met |
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Under Regulation D, purchasers of private placement offerings must be given full disclosure through a(n):
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Offering memorandum
Under Regulation D, purchasers of private placements must be given full disclosure about the issue, even though no prospectus is required (the issue is exempt). Disclosure is accomplished by providing the purchaser with a copy of an "Offering Circular," which for smaller private placements is called the "Offering Memorandum." There is no registration statement for private placements because they are exempt - the exemption is claimed by filing a Form D with the SEC. |
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A customer has an account with a brokerage firm that is in receivership. The account holds $350,000 of securities and has a $150,000 debit. Which statement is TRUE regarding SIPC coverage?
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The account is covered for $200,000
SIPC covers the equity in a customer's account, with coverage not to exceed $500,000 equity per account in securities. However, cash coverage is limited to $250,000. This account has $350,000 of securities and a $150,000 debit, so the equity is $200,000. The customer will receive $200,000 worth of securities in the liquidation. |
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Which of the following time stamps are on an order ticket?
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order entry,
order execution, and order cancellation, if canceled. |
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A customer wishes to open an account that will be used primarily to buy initial public offerings (IPOs). Which statement is TRUE regarding the proper procedure for prequalifying the account?
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The customer must sign a representation letter that he or she is not restricted from buying IPOs
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The primary criteria for a person to be appointed to a securities industry arbitration panel is that the person be:
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disinterested
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Research reports approved by a supervisory analyst must be kept by member firms for:
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3 years
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The Official Statement is:
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required to be delivered at or prior to settlement, if available
requested by underwriters to satisfy SEC due diligence requirements and the disclosure requirements of new issue purchasers |
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Under MSRB rules, any claim, dispute, or controversy shall be submitted to arbitration at the instance of all of the following EXCEPT a:
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broker-dealer against a customer who has not previously signed an arbitration agreement
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Which of the following options communications must be approved by the designated Registered Options Principal prior to use?
I Advertising II Sales literature III Independently prepared reprints |
I, II, III
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